Home Depot Shareholders Voice Concerns Over Custom
Dallas, TX, May 28--Shareholders bombarded Home Depot chief executive Bob Nardelli Thursday with concerns about inconsistent customer service and the retailer's stock price, which has fallen 13 percent during his tenure despite record company earnings.
At the Atlanta-based company's annual meeting and in a teleconference with reporters afterward, Nardelli promised that he would address the problems, though he did not lay out any concrete new plans on how he will do that.
Instead, he vowed that the nation's largest home improvement store chain would stay on strategy and continue to move ahead with its program to retrain employees and make stores brighter and cleaner. He also said the 1,740-store chain would keep its pace of opening a new store every 48 hours.
"I can only say, at any given point we may disappoint a customer," Nardelli told reporters, adding that the company's goal is to limit the times that happens. "It's not about losing the sale, it's about never losing the customer."
At the meeting, which was held in Dallas, a number of shareholders and customers told Nardelli that they continue to have problems finding items in Home Depot's cavernous stores. Several said that employees at some stores are not as helpful and knowledgeable about where products are located as they should be.
"Saying that Home Depot is customer-focused does not make it true," shareholder Barbara Maynard told the meeting.
Nardelli apologized several times to the crowd, but insisted that the company has made tremendous improvement in customer service in the three years he has been at the helm. He elaborated during the conference call with reporters.
"If you think about it, we have 300,000 associates. That's bigger than some cities," Nardelli said. "On any given morning, we have associates strapping on their apron and they're human beings. They may have had a good night, they may have had a bad night."
He added, "It's a continual challenge to keep everybody emotionally engaged."
Some shareholders also complained about Home Depot's stock price performance since Nardelli took over on Dec. 4, 2000, in light of the fact that the company has made a total profit of nearly $11 billion over that time.
Some said that Nardelli's compensation should reflect not just the company's financial performance but its stock performance as well. Last year, Nardelli was paid $2 million in salary and a $4.5 million bonus, and was given $10.56 million in restricted stock awards, a company filing shows.
Nardelli said he is disappointed by the stock performance, but is confident the price will increase over the long-term and he noted that the stock has performed very well over the last year.
"The market valuation versus company performance is out of whack," Nardelli said. But, he added, "We're going to stay the course, and I'm confident the street will eventually catch up with us."
Eric Bosshard, an analyst with FTN Midwest Research in Cleveland, said the customer service concerns are a sign of Home Depot's size, though he believes the company has improved under Nardelli and will continue to do so.
"When you're a company as large as they are, these things are bound to happen," Bosshard said. "The customer service experience today is not perfect, but it's better than it was three years ago."
In other news at the meeting, shareholders approved a proposal to require shareholder approval for severance packages for senior executives. The approval is essentially a recommendation to the board of directors, which has final say.
Also Thursday, Nardelli reiterated his support for Home Depot director and co-founder Kenneth Langone, who was named in a lawsuit filed Monday by the New York state attorney general's office over former New York Stock Exchange Chairman Dick Grasso's big pay package.
At the Home Depot meeting, Langone was re-elected to another
